The UK Financial Conduct Authority (FCA) has released a discussion paper outlining several proposals and inviting public feedback on crypto regulations in the country. Notably, one proposal seeks to ban public crypto offers from non-regulated entities.
Cryptocurrency Public Offers Draw The FCA’s Attention
According to the FCA, the proposals – detailed in the discussion paper titled “DP24/4” – aim to mitigate risks associated with digital assets while fostering growth and innovation within the sector. The paper is directed toward investors, crypto firms, industry groups, and other professional bodies involved in the virtual assets space.
One proposal garnering significant attention is a potential ban on public virtual assets offers. The UK government’s economic and finance ministry, HM Treasury, is pushing to outlaw most public crypto fundraising, with exceptions likely made for entities already operating in the UK or those qualifying under specific exemptions.
The FCA’s move aligns with broader efforts by regulators worldwide to tighten controls on unregulated offerings, which have often been associated with scams, investor losses, and market manipulation.
Draft legislation is expected to formalize the ban, signaling a notable regulatory shift. This development follows the FCA’s recent crackdown on Solana-based platform Pump.fun, which was barred from operating in the UK due to its failure to secure the necessary permit.
Beyond the proposed public offer ban, the FCA has also suggested that authorized digital assets trading platforms share market abuse data to identify and address suspicious activities. This initiative seeks to enhance transparency and improve user safety in the crypto sector.
The discussion paper further invites feedback on market admission, disclosure practices, and measures to tackle market abuse. The FCA has set a deadline of March 14, 2025, for stakeholders to submit their comments and input.
Other European countries have also called for global cooperation when it comes to regulating digital assets. For instance, countries like Denmark, Italy, and the Netherlands are mulling implementing tax monitoring rules to better align with European Union (EU) tax standards.
UK’s Digital Assets Stance: A Regulatory Overreach Or Necessity?
This paper is part of a broader effort to define the UK’s crypto regulatory regime, with additional papers expected to follow. Notably, draft legislation is anticipated next year, with the full regulatory framework slated for implementation by 2026.
The timing of the discussion paper coincides with mounting concerns over low regulatory compliance among digital assets companies. A recent report revealed that nearly 90% of digital assets entities in the UK fail to meet anti-money laundering (AML) standards. Regulators worry that lax compliance could expose the financial system to illicit activities, including fraud and money laundering.
In October, the FCA was urged to investigate short-form video hosting platform TikTok over allegations of illegally operating as a cryptocurrency trading platform. These incidents underscore the watchdog’s increasing vigilance in safeguarding financial markets.
Despite regulatory challenges, virtual assets adoption in the UK remains strong. According to an FCA report, approximately 7 million UK adults currently hold digital assets.
While the FCA’s push for tighter regulations is aimed at protecting market participants, it faces the challenge of avoiding excessive measures that might drive digital assets businesses to relocate to more crypto-friendly jurisdictions. For instance, the US has seen renewed optimism following the election victory of pro-crypto candidate Donald Trump. At press time, Bitcoin (BTC) trades at $105,998, up 3.1% in the past 24 hours.
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